Tuesday, August 7, 2018

Corporate Feud Delays Crucial Indian Navy Warship Project

Corporate Feud Delays Crucial Indian Navy Warship Project

The Indian Navy has flagged the need of a warship that can transport at least 3,000 troops with battle tanks in any exigency in the Indian Ocean Region. However, the government has not been able to award the contract to any of the two sparring bidders, as doing so could unleash a fresh political debate

One of India's most crucial naval asset projects meant for the domestic industry is stuck in a corporate feud. Despite being flagged as an urgent requirement for influencing maritime operations in the Indian Ocean, India's Ministry of Defense has not been able to finalize the $3 billion contract for four landing ships.

"No contract for construction of four Landing Platform Docks (LPD) has been awarded by Ministry of Defence," Nirmala Sitharaman, India's defence minister, responded to a question put up by a parliamentarian on Monday.

The question was whether the construction of four landing platform docks for the Indian Navy had been held up due to some dispute.

In her response, the minister did not elaborate on the details of why the contract had not been awarded to one of the two bidders — L&T and Reliance Naval Engineering Ltd. (RNEL).

The commercial bid for the project — announced in 2011 — was set to open last year, but was deferred after the government decided to award the construction of all the four LPDs to private industry. Earlier, it was decided that the public and private sector would be given the contract for two LPDs each.

The commercial bids subsequently submitted by the private firms were to be opened last month. The two shortlisted private firms L&T and RNEL were invited to the defense ministry to open the bid but the opening was canceled by the ministry without citing any reason. Insiders say that it is the ongoing feud between L&T and RNEL that is deterring the government from awarding the contract.

L&T has a tie-up with Navantia of Spain and RNEL with DCNS of France. RNEL has alleged that a senior Indian Navy officer has been favouring its business rival, L&T in the project. RNEL has sought a probe by the anti-corruption bodies on the matter. On the other hand, L&T has questioned RNEL's ability to complete the contract, given its poor financial health.

An industry source told Sputnik that the government may have chosen to defer the commercial bid because awarding the contract to any of the two firms could arm the opposition, which has already been constantly attacking the government over the alleged irregularities in the Rafale fighter jet contract.

"The opposition Congress Party is blaming the government for siding with the Reliance group in the Rafale contract. Imagine the political slug-fest if RNEL turns out to be the lowest bidder for the LPD project. Knowing the financial strength of the company; it would be very difficult for the government to handle the charges of favouritism," an industry official told Sputnik on the condition of anonymity.

The Approximately 200-meter-long diesel-electric propulsion LPD ships will have the capacity to remain at sea for at least 45 days. It is expected that the four LPD ships will be able to carry six main battle tanks, 20 infantry combat vehicles and 40 heavy trucks. Each ship is expected to carry 1,430 personnel, 470 sailors, and 900 troops. The ship would have the capability of simultaneous operation by day and by night of special operation helicopters and large helicopters up to 35 tons.

However, the delay in finalising the project has put brakes on the confidence of the Indian Navy, which is tasked to contain China's growing outreach in the Indian Ocean Region and to keep an eye on the country's movement ranging from the Persian Gulf to Malacca Straits and from the northern Bay of Bengal to the southern Indian Ocean to the east coast of Africa, despite a shortage of submarines, warships, fighter jets, helicopters and two aircraft carriers.